As one is almost used to these days from Kenya have local media once again given rabid critics of national carrier Kenya Airways an open platform where innuendo is chasing yet more innuendo and where the author’s – one is almost tempted to say hate – is dripping from both the lines and the in between the lines. Thankfully, this time, has Kenya Airways’ CEO Mbuvi Ngunze taken the fight to them in the public domain, with a rational and measured response without the sarcasm this correspondent would have poured over the authors.
Read on what Mbuvi Ngunze has to say and in the meantime, Kenya Airways remains my first choice for regional and continental flights for their superior inflight service and their facilities on the ground:
KQ IS DELIBERATE IN ITS DECISION MAKING By MBUVI NGUNZE
KENYA AIRWAYS·MONDAY, MARCH 7, 2016
A “special report” and an editorial carried in the March 5, 2016 edition of Saturday Nation, on Kenya Airways refer.
Read together, the compendium would appear to advance the view that key strategic decisions at Kenya Airways, especially under the airline’s ongoing turnaround strategy, are made haphazardly, without commercial interrogation and in a manner that does not advance the interest of the carrier or Kenya. Nothing could be further from the truth.
A significant part of the write-ups are nothing but a rehash of past issues that have already been resolved and a catalogue of untruths.
In the absence of any “news” to break, the writer, the bearer of a senior byline who should know better, resorts to innuendo, amplification of the views of faceless experts and undisguised opinion. We believe that the latter, sitting in a respectable publication, should be captioned as such to prevent it from masquerading as analysis.
While we welcome criticism and interrogation of our strategic decisions, this must never be based on untruths and rumors, as the author himself admits.
Tellingly, the author of the special report, did not, to our knowledge, make any attempt to get the views of Kenya Airways’ management on these weighty issues, a fact which betrays his motives and any extant claims to professionalism.
Kenya Airways being a public listed company has a significant level of both local and international shareholders and therefore any decision made by the board and management are made within this context.
Over the last months, I have made it clear we have three focus areas in our turnaround: closing of our profitability gap, revisiting our business model and reaffirming our competitive edge, and finding a sustainable financial structure for the business. This requires that we put everything under the microscope.
Our workhorse
The insinuation in the articles that we are selling the crown jewel in our fleet is false. While we may be emotional about retaining certain aircrafts, in the prevailing circumstances we must ensure that they operate in a way sustainable to the long-term interest of the business.
Both the B777 and B787 have the range and capacity to serve long haul markets. We have made the choice after careful assessment that the sale and sublease of the B777s will significantly reduce our monthly fleet and other costs at a time when we are looking to improve our profitability, while still continuing to serve the markets of interest with the remaining fleet.
The B777s are expensive to run based on their sheer size and only made money during the peak period, posting heavy overheads in the other months in terms of maintenance, repayment of loans and operations.
By selling or sub-leasing the B777, we are reducing our fleet cost by about $7 million in a month! The notion that it was not birthed on a strong business case and was solely motivated by the need to get rid of old experienced pilots, as implied, is laughable.
The Embraer is a versatile aircraft that allows us to fly short to medium haul missions more regularly with a smaller capacity, driving efficiency and thus serving the most profitable part of our network, which is the home and near home market.
Pilots
In the period of fleet growth, we had a gap in captains and advertised in the international market for experience to close this short-term gap. We recruited from Europe, Africa and South America. None were from KLM. We also train using a variety of facilities based on cost and convenience including the UK, Egypt, the Netherlands, Singapore, UAE, South Africa and Ethiopia.
London
While London is a strategic destination for KQ, it is not the most profitable and must be assessed in the same way as others. Our current operations commit two full aircrafts to this route, which is both inefficient and costly.
In assessing the reorganization of our operations for London, we took the opportunity to capitalize on releasing cash by selling our morning slot in combination with Air France. While the new operation will impact on London route economics, the overall impact for the business is net positive as we utilize our assets more efficiently and generate value from the sale.
Our analysis shows that there is going to be a shift in demand. However, we will continue to offer night connections to London through our existing operations into Paris and Amsterdam.
On the sale of the slots, all the relevant stakeholders, including the board and all key shareholders, were kept in the loop within the confines of our regulatory requirements. We will rent an afternoon slot in London, as is normal in aviation practice, with an option to buy it when our financial position improves.
KLM had no role in the slot sale. We combined our slot options with Air France to achieve an optimal proposition and we will share the proceeds 50:50.
Our commitment to KQ’s turnaround is unstinting. And contrary to what the Saturday Nation articles imply, we are making the bold decisions necessary to realize this. They may be unpopular but in the wider interest of the company and its sustainability, have to be made all the same.
Our strategy based on the three focus areas highlighted earlier is well thought through and on course. Most importantly, they are made in Kenya with the best interest of both the nation and its prized flag carrier at heart.
The airline continues to play a pivotal role in the country’s economic development and growth in key sectors. Despite recent challenges, we will turn around Kenya Airways.
It is a marathon, not a sprint and will take time and patience from our stakeholders. We believe we will bridge the profit gap, reaffirm our business model and secure long term funding to allow us to thrive as an efficient airline.
The author is the CEO, Kenya Airways.
